Agriland understands that the board of Kerry Co-op is to review legal advice it received relating to its share redemption scheme.
Following the advice, the board decided against putting a resolution to shareholders at a special general meeting (SGM) in Killarney today (June 21).
This involved placing the existing share redemption scheme into the co-op rulebook and preventing the board from spending more than €50 million without the consent of shareholders.
The meeting was held after the co-op’s Annual General Meeting (AGM) concluded at the Gleneagle INEC arena.
Kerry Co-op
Two resolutions which were put to shareholders today were defeated as they did not achieve the required two-thirds majority needed.
Although both resolutions were seen more as ‘housekeeping’ measures, their rejection will give the co-op board much to think about when it reviews the outcome of the meeting.
The first resolution related to the rotation of the Kerry Co-op board across its five-year electoral cycle and proposes to address an “anomaly” which arose following a review of representation on the board in 2019.
The second resolution focused on the minimum notice period required for the holding of special board meetings and “related communication matters”.
Shareholders
Earlier today, it had been claimed that there would be a “major revolt by a sizeable number of shareholders” at today’s meeting.
A statement was issued by Ciaran Dolan Agribusiness Consultants on behalf of a group of shareholders who are concerned at how Kerry Co-op will fund any potential dairy business joint venture with Kerry Group.
It said that that the co-op currently holds 12% of the shares in Kerry Group, which is worth approximately €2 billion.
“Up until recently, the [co-op] board and the shareholders were in full agreement that the funds of the co-op should be ring-fenced in order to fund the share redemption scheme for any co-op shareholder wishing to cash in his or her shares,” the statement outlined.
“In what is seen as a complete u-turn, the board is now saying that on legal grounds it cannot proceed with this ring-fencing of the funds and the board are seeking to retain full control over the future use of the co-op funds,” it continued.
“The concern of the shareholders is that the funds of the co-op will be substantially reduced to pay for the joint venture and that dry shareholders with no interest in milk processing will see their value in the co-op reduced significantly,” the statement read.
The group of shareholders outlined that they have obtained the opinion of a senior counsel who said the board is not prohibited from ring-fencing the funds for the redemption scheme.
However, it is understood that several options could be considered by the Kerry Co-op board on how to fund any potential joint venture.
In April 2021, talks between Kerry Co-op and Kerry Group on the joint venture were suspended after over 18 months of discussions.
It is believed the valuation Kerry Co-op placed on the dairy business was among the sticking points.